EXCLUSIVE: Inside the Industry Pushback That Forced Bank of England to Rewrite Stablecoin Playbook

The Bank of England (BoE) has softened its proposed stablecoin rules, removing planned limits on how much stablecoin individuals and businesses can hold. Instead, the central bank will introduce a temporary £40 billion cap on the total issuance of each systemic sterling-backed stablecoin.

The change marks a shift from last year’s proposals, which would have limited individuals to holding £20,000 worth of stablecoins. The proposed rules would have limited businesses to £10 million. After receiving feedback from industry participants, the BoE decided that an overall issuance cap would be a more practical approach.

Stablecoins Moving Beyond Crypto Use Cases

The updated framework reflects the growing view that stablecoins serve as a tool for payments and value transfer. Market participants and regulators no longer consider them just another crypto asset.

Sharing her perspective on the growing role of stablecoins, Renna Ba, Head of Ecosystem at Morph, said,

“It is evident that increasingly, people aren’t looking at stablecoins as crypto tokens. They are looking at them as a more efficient way to move value, particularly across borders where traditional payment systems can still be slow, expensive and fragmented.”

The expert said that adoption will depend strongly on building the infrastructure surrounding stablecoins. It will also depend on how they allow these assets to integrate with existing payments systems and platforms.

“And so, clear rules represent not only legitimacy, they also clarify the way forward for retail users, business communities and financial institutions.” Renna Ba concluded. 

Her comments come as regulators work to establish clearer frameworks for stablecoins and digital payments. Meanwhile, market participants say regulatory certainty could encourage more financial institutions and businesses to explore GBP-backed stablecoins across the UK and Europe.

BoE Eases Reserve Requirements

The BoE has also made reserve requirements more flexible. Stablecoin issuers can now hold up to 70% of their reserves in short-term UK government bonds, compared with the previously proposed 60%. The remaining 30% must still be kept in non-interest-bearing accounts at the Bank of England.

According to the central bank, this requirement is intended to ensure issuers have enough liquidity during periods of heavy withdrawals. Stablecoins must also be redeemable at face value within 24 hours. However, they will not be covered by the UK’s £120,000 deposit protection scheme.

The crypto industry has largely welcomed the revised framework. While some industry leaders argue that the reserve requirements remain restrictive, others view the removal of holding caps as a step toward broader adoption and innovation.

The BoE plans to finalize the framework by the end of 2026. The new regime is expected to launch in early 2027, as the UK continues to develop its stablecoin market.